Achieve Life Sciences Inc (ACHV) 2015 Q3 法說會逐字稿

Good day ladies and gentlemen, and welcome to the OncoGenex third-quarter 2015 conference call.

(Operator Instructions)

As a reminder, this conference may be recorded. I would now like to turn the call over to your host, Jim DeNike. Please go ahead.

Thanks Stephanie; and thanks, everyone for joining us. With me today from OncoGenex are Scott Cormack, President and Chief Executive Officer; John Bencich, Chief Financial Officer; and Dr. Cindy Jacobs, our Chief Medical Officer.

Before we begin, I'd like to remind everyone that today's conference call contains forward-looking statements based on current expectations. These statements are only predictions, and the actual results may vary materially from those projected. Please refer to OncoGenex documents filed with the SEC concerning factors that could affect the Company, copies of which are available on our website. I will now turn the call over to Scott.

Thanks, Jim. Good afternoon, everyone, and thank you for joining us.

Following the close of the third quarter, we find ourselves at a pivotal time for the Company as we await the first AFFINITY data readout by the end of this year, and a number of other significant readouts over the next 12 months. On the call today, I will provide an update on our Custirsen and Apatorsen clinical programs, and preview anticipated milestones through the end of this year and into 2016. John will provide a review of our financial results for the third quarter. And we will conclude the call with questions.

Let me start with Custirsen program and the first of two important milestones from our Phase 3 AFFINITY trial. The AFFINITY trial is evaluating the survival benefit of Custirsen in combination with cabazitaxel treatment, a second line chemotherapy, in men with metastatic castrate-resistant prostate cancer. The first of two analyses to be conducted will determine the ability of Custirsen to extend survival in a prospectively defined subgroup of men who are increased risk for poor outcomes. This group is comprised of men having two or more of five common clinical features, including poor performance status, elevated PSA, elevated LDH, decreased hemoglobin, and the presence of liver metastases. This patient selection criteria was developed in collaboration with study investigators and key opinion leaders following analyses that identified patients who significantly benefited from Custirsen in the Phase 3 SYNERGY trial.

Being able to prospectively identify these patients would provide guidance for physicians to determine which patients are most appropriate to receive Custirsen, and may also lead to earlier product registration. In order to reach a statistically significant survival benefit in this subgroup, we are required to reach a hypothesized hazard ratio of 0.69 with a critical hazard ratio being less than or equal to 0.78. Following discussions with both FDA and EMA earlier this year, we are confident in our ability to proceed with plans for regulatory submission for the subgroup population based on the patient selection criteria. Again, we expect to have these data by the end of this year.

At the same time as the final analysis for the subgroup, interim analyses for both futility and efficacy are scheduled to occur in the intent-to-treat or entire patient population of the AFFINITY trial. If this interim analysis shows early efficacy, we would proceed with an NDA filing for the entire trial population. If the early efficacy interim analysis does not show a highly significant difference, the study will continue as planned with final result expected in the second half of 2016.

To reiterate, the subgroup and ITT are separate analyses for survival benefit. In the event that the subgroup analysis is positive, we would proceed with discussions with the FDA on an NDA filing.

A growing body of evidence points to the role clusterin plays in blocking the effects of many known therapeutic agents. Preclinical studies have shown that tumor cells that over-express clusterin are likely to display more aggressive behavior and respond less well to chemotherapy, radiation, or hormone replacement therapy. At the 2015 European Cancer Congress, or ECC, meeting, in Vienna this past September, we presented data that looked at serum clusterin levels from men in the SYNERGY trial who had metastatic CRPC. The analysis showed that Custirsen treatment significantly lowered serum clusterin levels from baseline in men with metastatic CRPC. In addition, these data showed that serum clusterin reductions during Custirsen treatment resulted in higher two-year survival rates in those patients who were at increased risk for poor outcomes. Of those patients with lower serum clusterin levels, the data also showed a correlation to an overall survival benefit for Custirsen-treated patients who were ar increased risk. We believe this data supports the important benefit Custirsen may bring to these patients.

Before I turn to an update on our second product candidate, Apatorsen, I'd like to review the current status of the Phase 3 ENSPIRIT trial. ENSPIRIT is evaluating the ability of Custirsen, in combination with docetaxel treatment as second-line chemotherapy, to extend survival in patients with non-small-cell lung cancer. A protocol amendment to the statistical design and analysis plan of the ENSPIRIT trial was submitted to and approved by all regulatory agencies in participating countries. We believe this amendment, specifically detailing the revised statistical thresholds, are more appropriately aligned to the interest of both treating clinicians and their patients because the statistical threshold for efficacy is more aligned to clinical relevance. Based on current ENSPIRIT enrollment projections, we believe final survival results could be available in the second half of 2016.

I would now like to move to our other lead product candidate, Apatorsen. Apatorsen is designed to inhibit the production of Hsp27. Over-expression of Hsp27 is thought to be an important factor leading to the development of treatment resistance, and is associated with metastasis and negative clinical outcomes in patients with various tumor types. We are studying Apatorsen across multiple cancer indications, and in the past quarter had two important updates to our metastatic bladder cancer program. Patients living with advanced metastatic bladder cancer typically have a poor prognosis with very limited therapeutic options. At the ECC meeting, we presented additional analyses of data from the Borealis-1 trial, confirming that patients with advanced bladder cancer identified as having increased risk for poor outcomes also had increased baseline levels of serum heat shock protein 27, as well as increased circulating tumor cells. The study showed that baseline Hsp27 and circulating tumor cell levels were additional risk factors for survival outcomes.

This data further validates the subgroup classification for poor versus good prognostic risk in the Borealis-1 analysis, will show that patients with advanced disease who had specific poor prognostic risk factors experienced a clinical benefit with Apatorsen. These data have also been accepted for an oral presentation at the upcoming European Multidisciplinary Meeting on Neurologic Cancers on November 14 in Barcelona.

Our second Phase 2 Apatorsen trial in metastatic bladder, called Borealis-2, completed patient enrollment in the third quarter. The investigator-sponsored randomized Phase 2 trial has met its target enrollment of 200 patients and will evaluate overall survival with Apatorsen in combination with docetaxel in patients with advanced or metastatic bladder cancer who have disease progression following first-line platinum-based chemotherapy. Borealis-2 is sponsored by the Hoosier Cancer Research Network and is being conducted at 27 sites across the United States. We expect to announce these results in 2016.

Our Spruce trial is an investigator-sponsored randomized placebo-controlled Phase 2 trial in patients with previously untreated advanced non-squamous non-small-cell lung cancer. The aim of the trial is to determine if adding Apatorsen to carboplatin and pemetrexed therapy can extend progression-free survival outcome compared to carboplatin and pemetrexed alone. Additional analyses are expected to improve tumor response rates, overall survival, safety, tolerability, and the effect of therapy on Hsp27 levels. Patients who are at increased risk for poor outcomes will also be prospectively evaluated. The trial was initiated in August 2013 and patient enrollment was completed in February 2015. Primary progression pre-survival endpoint data is expected in the first quarter of 2016, with continued overall survival follow-up.

We have two additional investigator-sponsored Phase 2 trials in the ORCA program. Our Spruce-2 trial in untreated advanced squamous non-small-cell lung cancer, formerly called Cedar, is currently enrolling patients. The Pacific trial is being conducted in men with castrate-resistant prostate cancer who are experiencing a rising PSA while receiving Zytiga. The trial is also continuing enrollment of patients.

That concludes my update on our recent product candidate developments, and I'll now invite John to provide an overview of our financial results for the third quarter of 2015. John?

Thanks, Scott.

As of September 30, 2015, our cash, cash equivalents, and short-term investments increased to $65.9 million from $47.1 million as of December 31, 2014. Our ending cash and investment balances for the third quarter reflects an increase of $5.7 million from our June 30, 2015, balances and includes proceeds raised from the previously announced financing with Lincoln Park Capital.

Based on our current expectations, we believe that our cash, cash equivalents, and short-term investments will be sufficient to fund our currently planned operations into the first quarter of 2017, which may include, regarding Custirsen, announcing AFFINITY trial results including final results of the poor prognosis subpopulation by the end of this year, and final analysis for the ITT population in the second half of 2016, depending on timing of the event-driven final analysis; and announcing ENSPIRIT trial results, which could be available in the second half of 2016. Regarding Apatorsen, announcing Spruce trial results for the PFS primary endpoint in the first quarter of 2016, announcing Borealis-2 trial results in 2016, and continuing enrollment in the Spruce-2 trial and completing enrollment in the Pacific trial.

Revenue for the three months ended September 30, 2015, increased to $6.7 million from $4.8 million for the three months ended September 30, 2014. Revenue for the nine months ended September 30, 2015, decreased to $12.1 million from $21.5 million for the nine months ended September 30, 2014. Revenue for the current period reflects the recognition of the proceeds we received from Teva as advanced reimbursement for Custirsen-related development expenses. We expect a deferred revenue balance from the advanced reimbursement from Teva to be fully recognized in the first half of 2016, as we continue the development of Custirsen.

Total operating expenses for the three and nine months ended September 30, 2015, were $11.4 million and $27.4 million respectively, compared to $12 million and $44.3 million for the three and nine months ended September 30, 2014, respectively. The reduction in operating expenses in 2015 is primarily related to lower clinical trial costs for the AFFINITY and Borealis-1 trials as a result of patients completing treatment. This reduction was partially offset by higher ENSPIRIT trial cost as we became the sponsor in this study.

Net loss for the three and nine months ended September 30, 2015, was $4.6 million and $15.1 million compared with $4.9 million and $20.6 million for the three and nine months ended September 30, 2014, respectively.

That concludes my discussion of our financial results. I will now turn the call back over to Scott for closing remarks. Scott?

Thank you, John.

This is a very exciting time in the Company's history, with AFFINITY Phase 3 data expected by the end of the year and several key data milestones occurring throughout 2016. And as John just discussed, we are well positioned financially to achieve these milestones, and we are preparing for success. Thank you again for joining us today. And at this time, I would like to invite Stephanie, our operator, to open the line for questions. Stephanie?

Thank you. (Operator Instructions)

Katherine Xu, William Blair

Just curious about the interim analysis of AFFINITY and in the entire ITT population. Scott, can you talk about the futility and efficacy analyses a little bit more in detail, and how they are treated statistically?

Sure. Thanks for the question Katherine, and good afternoon. I will turn this one over to Cindy, our CMO, who is participating in this call as well. And she can give you some more detail and an explanation of both of those analyses. Cindy?

So for both of those analyses, they were requested by FDA to be done at the same time as we did the final analysis on the poor prognostic subpopulation. And we really haven't disclosed the details of interim analyses. So I won't be able to go into those details. But it was both for the FDA request, and at the same time. So we really are looking at the early efficacy interim, which obviously has a very high bar that to hit early efficacy.

Right. So it provides an opportunity, Katherine, essentially for an early stop on efficacy if that were seen in the ITT population. And as Cindy alluded, as you could expect, it would -- it does have a fairly high bar statistically to achieve that.

Okay. So you would conduct the futility first, and then once that's met go for the efficacy?

Actually both interim analyses are going to be done at the same time.

Thank you.

Thanks, Katherine.

(Operator Instructions)

Stephen Willey, Stifel

Just wondering at this point if you know what percentage of patients enrolled into AFFINITY meet that poor prognostic criteria that you've defined out of the entire patient population?

Out of the entire patient population. Yes, thanks Steve. Again, appreciate the call, and good afternoon. Again, since Cindy is online and [has met various data sets in] the analysis from a statistical perspective, I can turn this one over to Cindy to again respond to that question specifically. Cindy?

Sure. We do not know the analysis. We still view it as going to be two-thirds of the population when we were doing some estimates, looking at still that 60%, 63%. But we don't know specifically until we get the final analysis from our independent statistical group.

Okay. And can you remind us what the percentage of patients that fell into the poor prognostic in SYNERGY was? It was a little bit lower, correct?

Yes. Well, we did the first analysis with the [scape] score, and that was by default 50% because as it was a median. And then we did the two to five, it was about 41%, 42%.

Okay. So the delta there between the two to five in SYNERGY and two to five in AFFINITY just reflects the fact that this is a patient population that's removed from another line of therapy?

Correct. The reason why we're kind of still estimating about two-thirds is because even if you look at performance status, in the SYNERGY it was about 30% of the patients have what would be a more poor performance status and 50% in the AFFINITY. So right there you can see the difference. And then you're adding in the other four risk factors as well, which those patients in AFFINITY should have worse prognostic status.

Okay.

Than the SYNERGY patients.

Okay. That's all I have. Thanks for taking the question.

Great. Thanks, Steve.

Chad Messer, Needham & Company.

Thanks for taking the questions. The hazard ratio is 0.69 you said for this high-risk population. I am sure you have given it before, but can you remind what the hazard ratio is for the whole ITT population?

Sure, and thanks a lot for the question. And good afternoon, Chad. Cindy, you are on a roll so we will turn back to you again for the stat.

Sure. For the ITT population, that hazard ratio, the hypothesized hazard ratio, did not change. It remains specified as 0.75. It was looking at the poor prognostic group that we specified it at 0.69, as we view this if we have efficacy in these patient population, it would be at a lower hazard ratio of 0.65 -- 0.69, sorry.

Okay. Obviously like you guys looking at the data, you have a shot with the total population and then maybe an earlier shot with the high risk. I'm just wondering about the bizarre situation if high risk miss and we go onto the ITT, what that would mean? Intuitively, I guess that would mean high risk wasn't as good of an indicator as we thought. Is that a fair assumption, or is there an alternate way to look at that?

Yes, I think, Chad, I think that is a really good question and one that's worth articulating a little bit more. From what Cindy had just said about the statistics, there's obviously a higher bar placed on the poor prognostic subgroup population. So there is a situation where you could have, for example, just missed that from a hazard ratio perspective where you could still get it from the ITT because you do have a higher bar on that subgroup population. And that is obviously a risk that as in that trial.

All right.

Just to add one other point, Chad, the other point I guess on that is both of these from our perspective, and I think from a regulatory perspective, do both achieve clinical relevance as well. So it's not like the poor prognosis is at a level that would be relevant and the ITT population is something that is less than relevant. I think it's a fair statement to say that both are highly relevant from a clinical perspective as well.

I agree. I know it's early afternoon over there, but the sun has set here. So I have a glass that I am raising to SYNERGY. And best of luck to you guys.

Thanks a lot, Chad. Very much appreciate it. We, too, are looking forward to that data that's coming up on us pretty quickly now.

Katherine Xu, William Blair

Thank you for taking a follow-up. I just want to make sure in the press release that you are going to give, you will talk about a final analysis of the poor prognostic group and you also talk about the interim analysis results of the whole entire population?

Yes. So there is -- I guess I'll start with the first part of this and then we will move into the second part that perhaps Cindy can talk to as far as some additional detail for you. So it depends obviously on the outcome of the trial. If the trial is positive, we would be providing top-line results consistent with what you would normally see with survival kind of indicators in there. And preserving enough information that we could still present it in an appropriate scientific congress, like an ASCO or one of those types of congresses. So in a positive situation, you see on the poor prognostic population that kind of a top-line result announcement.

Then if you flip it, if we are unfortunate enough to see a non-positive outcome, then we won't be able to disclose anything with respect to the poor prognostic group because we don't know it. That Cindy had articulated that they can -- in the previous question, because we are continuing the trial for the ITT population, we need to remain blinded as sponsor of the trial in that particular event. So all we will be able to say is we didn't hit the statistical threshold for that poor prognostic group and we will continue. And then once we get to the requisite events for the ITT population, then obviously we'd unblind the trial. Cindy, maybe you could add something else onto that.

No, I think you did a good job. For all three of these analyses, we'll be reporting whether it crossed the criteria or not. Obviously, for the interim you could have -- that it's not futile; the study is continuing. Or the early efficacy, which would require a highly significant p-value. So even if you have, for the ITT, a hypothesized hazard ratio of 0.72 versus our hypothesized 0.75, it'd have to be highly statistically significant. It may not reach that highly statistically significant bar because it's quite high. So even though we don't meet the early efficacy, that doesn't mean that the final analysis would not have a chance.

Right.

Go ahead.

Sorry. I was just going to say the other thing to mention, because I don't think I mentioned it in the first piece, is in this situation, even with a positive poor prognosis, in the situation where we haven't hit the early efficacy we won't know the results of the ITT population in that scenario either. So again, it's either going to be as continuing or not with respect to the ITT on an early [stop] and it's under an early stop that we would know any details in that circumstance for the ITT population.

[Ending] with the poor prognostic patients, obviously that is a high bar to have a hypothesized hazard ratio, 0.69. So these are all done to really move forward earlier than the ITT final analysis if we hit one or both of those.

Right.

Or either one, actually.

Very good. Thanks, Katherine.

Stephen Willey, Stifel.

This is taken the follow-up. Just a curiosity question on Spruce. I know that you're guiding to PFS data first quarter next year. But then I'm presuming that ultimately survival will be the key determinant as to whether or not you decide to go forward with that study. Is that correct?

So the primary on it, Steve, is PFS. That is the primary end point for the trial. From a corporate perspective, obviously we're going to have the PFS data ahead of the survival trial. And we would look at the PFS. And I think we start guiding our efforts according to the PFS in the interim. But you're right, a registration endpoint for lung remains survival. And so we would still want to see what that looks like to make an ultimate decision.

But I guess in a scenario where we saw a positive PFS, Cindy and team would be rapidly encouraged to start protocol writing and development of the Phase 3 strategy. How is that for foreshadowing, Cindy? And then obviously wait for the survival results to see where we go, because that ultimately is going to be your design of the trial. I think we would like to see survival numbers so that we can preplan sample size and so on because up until you know what that is, it would be estimated. But having the reality of the Phase 2 experience I think would be helpful.

The other side of that equation is if it doesn't hit on PFS, wouldn't probably go through the effort of pre-writing protocols and so on until we saw the OS, but there certainly are circumstances in diseases like lung cancer where PFS does not translate to survival. And because survival is your primary approvable endpoint, we would basically just wait for next flip to see if there's a survival benefit in the absence of a PFS [advancement].

I guess asked the question just in the context of -- you hear, I think, some of the initial penetration rates, that kind of Bristol and Merck are speaking to post-introduction of PD-1 into second line lung. And it seems like those two drugs have become fairly entrenched. So I'm kind of wondering if you think that it's going to be really hard to kind of elucidate some kind of OS benefit now in second-line lung with the introduction of these fairly active therapies post first-line?

Yes. So with respect to the checkpoints, there's first a market question and then secondly is, does that affect our trial. From a market perspective, I think looking at the data set, first from the checkpoints. First it's obviously very clear that these are not cures for lung cancer. And patients will progress through that therapy as well as other therapies, and there remains a desperate need to do something for those patients. So I don't think from a market perspective that changes.

Then I think with respect to the non-squamous population, there's probably different opportunities, depending on health status of that group as well. So whether you are taking good versus poor prognostic patients, I think there is a delineation in that patient group, actually with the checkpoints that may have represent different opportunity.

The broader question then comes down to, do the present trials or the internal of those drugs and the tail-end of this trial have potential to complicate the OS? That's always an interesting question when you have a new agent that comes in that makes a potential survival benefit in the landscape that could be getting post therapies. That is something we'll obviously have to look at. And we're obviously sensitive to it, given the synergy history.

But I think given lung cancer and how quickly these patients pass away, I think a fair number of those patients probably will have been treated through before these agents would have become available to them. So I think we will have to look at it, and I don't have the numbers off the top of my head or that we've even looked at how many patients will have received these agents as a subsequent therapy, but it is something we will have to look at in the context of the results.

Okay. Thanks for the follow-up.

Great. Thanks a lot Steve. Appreciate the questions.

And I'm showing no further questions. I will now turn the call back over to Scott Cormack for closing remarks.

Great. Thank you very much, Stephanie. Thank you very much for participating in today's call. Clearly our excitement level is increasing substantively as we approach now the first of the two analyses tests that we'll be conducing on AFFINITY. That's a very near-term objective that is occurring this year. Very excited about that.

And then as we roll into 2016, we start to post material events for us as we go through a number of our clinical trials and starting to see results from the efforts of our clinical development plan. And so it will be not only an exciting time as we come to the close of 2015, but certainly through 2016 as well. And looking forward to further communications and updates with all of you on the phone and participating by website. Thank you again very much for participating on today's call.

Thank you, ladies and gentlemen. That does conclude today's conference. You may all disconnect, and everyone have a great day.